Hurricanes are hitting the Atlantic basin with ever greater frequency, placing ever-greater risk upon yacht owners. To avoid loss, preparation is key. Risk mitigation, complemented with innovative insurance solutions, can help to minimize risk.
The US faces growing hurricane intensity
Warmer oceans and atmospheric temperatures are driving an increase in the intensity of hurricanes and other storms in the Atlantic basin, characterized by higher wind speeds, heavier rainfall, and greater flooding risks. In the 2024 season, Hurricane Beryl became the earliest category five Atlantic hurricane since records began around 100 years ago. Reaching category five status on 2 July, it achieved maximum wind speeds greater than 257 kmph (opens a new window) (160 mph). There has only ever been one other category five hurricane recorded in July, in 2005.
Evidence also suggests that the rate at which hurricanes gather speed has risen significantly, a process known as rapid intensification. In 2024, Hurricane Francine saw its wind speeds increase by 35mph within 24 hours (opens a new window), escalating it from a category 1 storm to a category 2 just one hour before making landfall. The storm was fueled by high water temperatures in the Gulf of Mexico. This phenomenon is making tropical storms increasingly difficult to predict, reducing the efficacy of warnings and evacuation orders.
The impact of these hurricanes is severe. According to Munich Re (opens a new window), tropical cyclones (including hurricanes) contributed to global losses of US$135bn in 2024, and US$52bn in insured losses. US hurricanes accounted for the majority of these, coming in at US$105bn’s worth of losses, of which $47bn were insured. 2024 was also the second costliest year on record for severe thunderstorms (following record figures the previous year), which brought further losses of US$57bn.
Economic losses from tropical cyclones are increasing dramatically. According to data (opens a new window) from the US National Centers for Environmental Information (NOAA), the average annual cost for weather and climate disasters between 2010-2019 was $99.5B, across 13.1 events per year. By contrast, there have been 23 events per year between 2020-2024, while costs increased by 50%, to $149.3B annually.
Risks to yacht owners
The rising hurricane threat exacerbates an already catastrophic risk for yacht owners. Where hurricanes pass close to yachts, they have the potential to inflict severe damage. High winds and waves can also cause yachts to flood or capsize. Yachts may be unable to anchor—or if they have anchored, the strong currents associated with hurricanes and other tropical storms could result in anchor dragging, grounding, or collision, and damage to the anchor itself. Similarly, if moored in a dock, yachts may break free from their moorings and collide with nearby vessels or other structures.
Smaller yachts may be particularly exposed to hurricane threats. Such vessels may be without a full-time crew, limiting the ability of a captain to respond quickly to a storm. As hurricane intensification becomes more rapid, such vessels will be at ever greater risk. Even yachts with the benefit of a dedicated crew may be too small to move out of the hurricane path at short notice, leaving them susceptible to damage.
Yacht owners not only have to contend with the damage itself. They may find themselves unable to use or charter the yacht, and they may incur significant costs to repair their vessels. In the worst-case scenario, yachts may need replacing entirely.
To mitigate these risks, preparation is vital. Where possible, owners should relocate yachts to a safe location, such as a hurricane-proof shelter. Vessels should be secured in a marina or on a mooring. Using extra mooring lines, clearing the decks and equipment, covering vents, and lowering sails can all help to minimize damage. Portholes and windows should also be fastened, and any valuables removed.
Using parametric insurance to transfer your risk
Typically, yachts are not covered by insurance during a storm event unless they’re anchored in designated storm shelters. But these are expensive and too often unavailable, forcing many owners to leave their vessels in less protected areas. Policies typically have low limits, high deductibles, and onerous warranties and conditions. Inevitably, this leaves owners without the critical cover they pay for, or need.
By contrast, parametric solutions use extensive data to predefine your risk parameters. They use a so-called ‘cat-in-a-circle’ structure, meaning that a payout is triggered if the path of a qualifying hurricane (cat) passes within a specified radius around an insured location (circle). If your vessel is damaged by a hurricane in that location, your claim is automatically triggered. Your payout follows soon after.
Parametric policies are usually predicated on a fixed insured location. However, thanks to the advance of automatic identification system vessel tracking, claims can now be paid for yachts docked at any of the 2,457 marines along the southern and eastern US coast, or within 500 meters of a marina. Premiums are calculated on your vessel’s ‘home marina’. However, you can be eligible to pay an additional premium, or to receive a premium return, based on the location of your yacht during the policy period.
By establishing pricing zones that correlate to hurricane threats, parametric solutions can help owners to more effectively manage their risk exposure, and their associated premium costs.
Parametric payout structure
Hurricane category | 1-min maximum sustained windspeed (mph) | Hurricane track less than 15 miles from vessel | Hurricane track between 15-30 miles from vessel |
|---|---|---|---|
1 | ≥74 and <96 | 0% | 0% |
2 | ≥96 and <111 | 15% | 0% |
3 | ≥111 and <130 | 40% | 20% |
4 | ≥130 and <157 | 60% | 30% |
5 | ≥157 | 100% | 70% |
Other benefits of parametric storm cover:
Financial rewards for good risk management
No deductibles or excesses
No erroneous storm-shelter conditions
Cover for vessels from $1-10m in hull value, up to 500 gross tons
Quotes within 48 hours
Claims paid within 30 days
Download our brochure (opens a new window) for more information, or reach out to a member of our team.
